LG Chem takes rival to U.S. court

It is claiming that SK Innovation stole key battery trade secrets

LG Chem is taking its battle with SK Innovation to the courtroom and to the U.S. bureaucracy, claiming that its rival stole battery secrets.

On Monday, LG Chem made a request to the U.S. International Trade Commission (ITC) asking for it to halt imports of batteries made by SK Innovation.

It says that the competitor had stolen its trade secrets by hiring away its employees.

According to the ITC’s website, LG has filed for an investigation into lithium-ion batteries and other battery products from SK Innovation and its overseas units for anticompetitive behavior.

The company also said it filed a lawsuit against SK Innovation in the District Court for the District of Delaware on Monday for damages caused by the alleged infringement. SK Innovation’s U.S. unit is located in Delaware.

LG Chem explained that it is taking legal action after it found documents detailing the battery technology leaks. It added that it filed the lawsuit in the United States as the legal process there allows for a transparent evaluation of evidence.

According to LG Chem, SK Innovation hired 76 of its battery employees since 2017 and that trade secrets were exposed through the employment process as applicants worked together in a collusive manner to detail LG Chem’s technology.

It added that hundreds of documents related to its core internal system technologies were accessed by the individuals before they were employed at SK Innovation.

SK Innovation expressed regret about the legal action in a statement, adding that the employment process was conducted in good faith.

“SK’s battery business has employed experienced candidates from Korea and overseas through a transparent process,” the battery maker wrote in the statement. “By clearly evaluating the issues posed by LG Chem, [we] will make a complete explanation through necessary legal procedures.”

LG Chem said it expects ITC’s final ruling to be made in the second half of next year. Analysts say the legal action could stall SK Innovation’s expansion.

“SK Innovation had planned to supply batteries to Ford and Volkswagen,” said Hwang Yu-sik, an analyst at NH Investment & Securities, in a note. “SK Innovation has to consider production restrictions and possible compensation awards from the ITC investigation, so expansion of its battery plants in the United States and Europe may be delayed.”

The courtroom battle escalates the rivalry between the two companies amid increasing global demand for electric vehicle batteries.

SK Innovation has aggressively expanded its battery manufacturing capacity over the past few years, building plants in Hungary, China and the United States.

LG Chem decided earlier this year to invest 1.2 trillion won ($1.03 billion) in expanding manufacturing capacity at its battery plants in Nanjing, China.

Globally, 110 gigawatt-hours of electric vehicle batteries were produced in 2018, an 83 percent rise from the previous year, according to SNE Research, a battery market tracker based in Seongnam, Gyeonggi.

SNE Research data showed that LG Chem ranked fourth in the global electric vehicle battery market from January to February this year, with a 10.4 percent share.